In a disturbing move that caused an eruption among self-published authors, Amazon’s ACX division has announced a reduction and simplification of royalty rates. Rates that previously started at 50% and escalated to 90% have been reduced to a flat 40%. All of these rates were for their exclusive agreements, which kept audiobooks at Audible, Amazon, and iTunes. These royalties are often split between the author and the voice actor (VA).
The barrier to entry is high for self-publishing audiobooks. If the VA is paid upfront, costs can exceed $3,000 for a professionally voiced work of 100,000 words. Another way to produce works through ACX involves the VA doing the work for free in exchange for half the royalties received for each sale. A reduction of royalties means it will take longer for the author to pay back the VA in the first case and makes the risk of performing for free much greater in the second case.
The result of this will inevitably be less participation in the ACX program. 40% is an odd rate, in my opinion, as authors and VAs are delivering a final product that only needs distribution. The letter announcing the royalty rate points out that the 40% is greater than what most publishers pay, but those publishers also fund the recording and handle all QA and production duties. A fairer move would have been to get rid of escalators and move to a flat 60% royalty rate. Given the higher bandwidth needs of audio, matching the 70% of KDP seems unlikely, but 50% should be the bare minimum for distribution costs. Bookstores take less than this to store and sell physical books.
The other wrinkle here is the doubling of the bounty for new customers who sign up for ACX. For top-name authors, these bounties can add up to more than what they earn from royalties. Expanding the bounty program ensures that the rich will get richer while the self-published ACX authors hoping for more visibility will be left out in the cold. Rather than making up for the reduced royalty rate, the extra bounty adds insult to injury.
It remains to be seen what the result of the reduced rate will be. Will more authors who already use iTunes Producer to upload e-books do the same for their audiobooks? Will the third type of ACX production — author-recorded — become the new defacto? And will that result in a drop in quality? Will VAs stop auditioning for as many jobs, now that earning out will be more difficult? Will a new distributor emerge, and how will they match Audible’s current distribution network? Will ACX go global in order to make up for the drop in participation by casting a wider net worldwide? Or will the backlash and fears of KDP or CreateSpace following suit with their own reduced royalties cause Amazon and ACX to do an about-face and raise the flate rate to a more reasonable 50% or 60%?
Time will tell. There will certainly be repercussions. Personally, I’m shocked that Amazon would do anything to fuel the speculation that once they grow big enough, authors will suffer. Whatever margins they hope to improve by this 10% move can’t possibly be enough to cover the damage they’ve caused in public relations or the power they’ve granted to their detractors.